1988 (3) TMI 421 - HC - VAT and Sales Tax

Summary

Issues:
1. Claim for refund of sales tax under the Bihar Finance Act, 1981 due to inter-State trade and commerce sales.
2. Rejection of the refund claim by respondent based on limitation period under section 15(b) of the Central Sales Tax Act, 1956.
3. Interpretation of the State Government's power to impose a limitation period for refund applications.
4. Comparison of relevant case laws regarding the imposition of limitation periods for refund claims.

Analysis:

The case involved the petitioner purchasing coal rejects and middlings from Tata Iron & Steel Company Limited (TISCO) and subsequently selling part of the purchased coal in inter-State trade and commerce. The petitioner paid sales tax under the Bihar Finance Act, 1981, and also paid central sales tax. The refund claim for sales tax paid under the Act was rejected by respondent No. 2 citing non-compliance with the three-month limitation period from the date of inter-State trade sale.

The main issue revolved around the interpretation of section 15(b) of the Central Sales Tax Act, which provides for refund of tax paid on declared goods sold in inter-State trade or commerce. The petitioner argued that the State Government could not reject the refund claim based on a limitation period, as it was beyond their power. Conversely, the respondents contended that the State Government had the authority to prescribe conditions, including a limitation period, for refund applications.

The Court analyzed various case laws cited by both parties, including Munshi Abdul Rahiman and Bros., Sri Venkateswara Groundnut Factory, A.K.D. Alaga Raja, and Shivaratan Inderchand Mundra. These cases supported the State Government's right to impose a limitation period for refund claims under section 15 of the C.S.T. Act. However, the Court noted that the Bihar Act did not contain a similar provision, unlike the Sales Tax Acts of Andhra Pradesh and Orissa.

The judgment referred to the case of State of Mysore v. Mallick Hashim and Co., where the Supreme Court held that a rule prescribing a limitation period for refund applications was unreasonable and could not be sustained. Applying this precedent, the Court concluded that the limitation period under rule 35 of the Bihar Rules was unreasonable and quashed the orders rejecting the refund claims.

In the final decision, the Court allowed the writ petitions, quashed the rejection orders, and directed the respondents to refund the petitioner's entitled amount under section 15(b) of the C.S.T. Act with interest. The judgment highlighted the unreasonableness of the prescribed limitation period and emphasized the precedence set by the Supreme Court in similar cases.

The judgment was delivered by SATYESHWAR ROY and SINGH B.P., JJ., with both judges concurring on the decision to allow the writ petitions and order the refund of the petitioner's entitled amount.